Home collateral New DeFI CreDA Platform Seeks to Reduce Risk in Crypto World

New DeFI CreDA Platform Seeks to Reduce Risk in Crypto World

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CreDA protocol will use AI to deliver credit ratings using on-chain and traditional financial data

NEW YORK, November 25, 2021 (GLOBE NEWSWIRE) – CreDA (Credit DeFi Alliance), the world’s first decentralized credit scoring service, officially launched its platform after a successful open beta. Inspired by traditional consumer credit bureaus, CreDA introduces the concept of personal credit score into the $ 200 billion decentralized finance (DeFi) ecosystem populated by cryptocurrencies such as Bitcoin, Dogecoin, and Ethereum.

Leveraging existing blockchain infrastructure, CreDA provides a trusted architecture for the relatively young and volatile ecosystem and a link between traditional and on-chain financial systems. It aims to simplify transactions for users, minimize risk for lenders, and allow access to capital without the need for the high amounts of collateral that are currently required by DeFi lenders.

According to Bank of America, more than 200 million users are now in the digital asset universe, but very few financial institutions would give them a loan. Even within the DeFi space, lenders operate oversized with typical loan-to-value (LTV) ratios below 50%. This means that a DeFi platform with an LTV of 50% would require a user to deposit at least $ 10,000 to take out a loan of $ 5,000. Additionally, most platforms only accept crypto assets as a form of collateral, creating further barriers to participation.

“In traditional finance, the total value of unsecured credit-based loans is several times that of secured mortgages,” said Cassie Zhang, COO of CreDA. “Credit scores are a critical and missing element in the DeFi space. The introduction of CreDA credit scores will allow unprecedented imagination and innovation for protocol users and developers. But more importantly, CreDA delivers on the promise of blockchain and decentralized finance, providing the architecture confidence needed to unlock capital for the billions of people without access to traditional banking services. “

CreDA will allow users to link their wallets, create an NFT loan (cNFT), and borrow low or unsecured loans, all from the same platform. Users will also be able to use their cNFT on partner platforms to enjoy similar benefits as well as other incentives for staking and lending. At launch, CreDA partners include: UniSwap, SushiSwap, Elastos, FilDA, PolyNetwork, O3 exchange, WePiggy, Canals, and dForce.

How credit scoring works:

CreDA provides on-chain credit ratings using CreDA Oracle, which uses artificial intelligence (AI) to examine the user’s historical transactions in the crypto space across multiple blockchains. This data is used to calculate a credit score which is then transformed into a secure non-fungible token called an NFT Credit (cNFT). The cNFT allows the user to unlock preferential rates and incentives in a variety of use cases, for example reduced borrowing rates on DeFi platforms.

Built on the Ethereum Layer 2 network, CreDA will run on multiple chains including Arbitrum, BSC (Binance Smart Chain), Polkadot, Polygon, HECO (Huobi ECO Chain) and ESC (Elastos Sidechain).

According to the developers of CreDA, Credit Oracle has already retrieved data from billions of chain activities linked to more than 50 million addresses. This large initial pool of data helps create a reliable and trustworthy credit model that will continue to improve as more data is collected from users who log in and establish their credit scores.

One of the main goals of CreDA is to ensure a safe and secure experience for users. To achieve this, the data is fully protected, secured by state-of-the-art W3C-compliant DIDs, which are created as part of a user cNFT. For its launch, CreDA is also undergoing a strict security audit with a leading blockchain security group, Certik, and will perform similar audits on a regular basis.

The objective of the CreDA protocol is to eventually combine traditional (off-chain) and blockchain (on-chain) data to calculate a holistic user credit score that allows more flexibility and access between virtual and “real” life of users. people. This will become even more relevant as technology advances and society continues to embrace virtual spaces, such as the metaverse.

“As Benjamin Franklin once said, ‘If you want to know the value of money, try to borrow it!’ Zhang said. “The DeFi landscape is changing rapidly, but one factor is still missing: credibility. The CreDA protocol enables DeFi platforms to model the risk profiles of their user base and to offer pricing and services. personalized, making them more competitive compared to their peers in the sector.

“CreDA is finally giving credit to the communities, the decentralized global networks of researchers and technologists who are building this new digital landscape. the action.”

Through participation in the CreDA protocol and virtuous on-chain activity, users can benefit from preferential margin rates, better credit scores, and a range of incentives based on their credit score.

Keeping DeFi’s promise

In the early days of DeFi and blockchain technology, there was a vision that by decentralizing the industry, there would be better access to capital for people who do not have access to traditional banking services. However, the reality has not been so simple, as the lack of confidence in the system means that lenders have to reduce risk by demanding crippling amounts of collateral, which has become the norm in DeFi.

CreDA delivers on the promise of blockchain and decentralized finance, providing the trust architecture needed to unlock capital for the billions of people without access to traditional banking services. Additionally, by turning people’s crypto experience into creditworthiness, CreDA legitimizes people’s on-chain behavior, which can allow better access to traditional loans.

“Whether you are a rural farmer in sub-Saharan Africa or a recent college graduate in Los Angeles, there are still many barriers to accessing capital in traditional financial systems,” says William Zhang, head of security architecture at the World Bank. Consolidate and defend data as capital. “Although blockchain and DeFi have helped democratize data and finance, there is still a lack of trust that can be limiting for people with no existing collateral. But a solution that provides access by rewarding good on-chain behavior and allows new users to gain confidence the system could open up new possibilities for nearly 2 billion people worldwide. “

Social connections

Twitter: https://twitter.com/credafinance

Linkedin: https://www.linkedin.com/company/creda-finance

Media contact

Company name: CreDA (Credit DeFi Alliance)

Contact Person: Jamie Read, Marketing Director

Company Email: [email protected]

Website: www.creda.app

THE SOURCE: CreDA



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